"A lot of people think that innovation is just about generating ideas," he said.
"And actually, if you look at some of the things that the administration has said
over the last few years, you could be forgiven for thinking it's all about
crowdsourcing, big data and those sorts of things."

Instead, the memo is about agencies trying new methods, establishing whether they
work, gathering data about their effectiveness and promoting the methods that are
the most effective.

Jitinder Kohli, director of Federal Government Performance at Deloitte

The memo came from Director Sylvia Burwell of the Office of Management and Budget,
Director Cecilia Munoz of the Domestic Policy Council, Director John Holdren of
the Office of Science and Technology Policy and Chairman Alan Krueger of the
Council of Economic Advisers.

The memo introduces the idea of agencies using scientific, behavioral insights to
improve the way employees do their jobs and increase the effectiveness of agency
programs.

"Science has told us a lot about how people make decisions, the way in which we're
wired and how we sort of decide which way to go," Kohli told The
Federal
Drive with Tom Temin and Emily Kopp on Aug. 5. "And what it's saying
is
that agencies use these behavioral insights to find programs that are both cheaper
and more effective."

Deloitte developed six white
papers that provide examples of how agencies could apply behavioral insights.

"It's absolutely essential that agencies take risks, and I think that's exactly
what the White House is saying here," Kohli said. "But it's going further than
that. It's really saying, 'Don't just take a risk and not work out what impact it
had. Actually, constantly measure the effectiveness of the new approach that
you're taking. Make sure your grant programs are designed in a way that your
grantees are incentivized not only to try new and different things, but to
establish the relative effectiveness of those things and always keep an eye on
what works and what doesn't work and use that information to scale the things that
are most effective."

One of the principles of innovation is being clear about what it is you're trying
to achieve, Kohli said. Also, you should look far and wide for the best ideas and
then build simple protocols that allow you to get timely, useful data about the
effectiveness of those strategies.

"I don't think that requires you to have large, new departments or different kinds
of people," Kohli said. "And, indeed, a lot of work is not done in Washington.
It's done out in the states and among the grantees, so often you might have to
help grantees and build that capacity in the space."

For example, in a grant program that has 100 grantees, some will always get "more
bang for their buck" than others, Kohli said.

"Often, federal agencies don't even know which ones are which, let alone use that
information in real time to help drive improvements in the program," he said. "So,
you can imagine an agency that's more focused on innovation knowing which grantees
are more effective and which get more bang for the buck, for their dollars, and
then using that information to help those grantees at the other end of the
spectrum really learn from the best grantees. That's sort of innovation in
action."

Using behavior insights can help save money

Kohli said the British government has used behavioral insights to get more
citizens to pay their taxes on time.

Her Majesty's Revenue and Customs — the British equivalent of the Internal
Revenue Service — changed the color of the envelope it used to communicate
with taxpayers from brown to white and added a handwritten message on the envelope
that said: "This is important. Please open it." In the text of the letter itself,
it added the phrase "Nine out of 10 people in your neighborhood pay their taxes on
time." With these simple changes, the British government saw the taxpayer
compliance rate jump from 68 percent to 83 percent, which resulted in $45 million
in savings.

"People seem to feel that they want to be part of the norm," Kohli said. "People
don't want to be the odd man out. So, being very clear with them that they would
be seems to have this effect. It's hard to argue that you want people to pay
their taxes on time. If you want people to pay their taxes on time, then a letter
that's well designed is clearly the right answer."

According to the White House memo, the IRS is in the process of making similar
changes.

"They're also changing letter design, and they're also checking to see which
wording is most effective," Kohli said. "And then, they'll scale the ones that are
the most effective and sort of grow those approaches."

One of Deloitte's white papers
pointed to the Department of Agriculture as one agency that could also benefit
from behavioral insights to reduce childhood obesity. The report described how
Google applied behavioral principles to create "smart lunchrooms":

Moving water bottles to eye-level increased water consumption by 47
percent

Moving M&Ms from transparent to opaque containers led to a 9 percent drop in
caloric intake from candy in one week.

USDA could apply similar behavior insights in establishing new guidelines for
school lunchrooms and thereby increase the effectiveness of one of its health
initiatives.

Changing behavior through behavior insights

Another Deloitte white paper
examined how behavior insights could be used to reduce the number of
traffic-related fatalities on the nation's highways.

The British Department for Transportation recently conducted research to identify
the characteristics of the drivers who caused crashes. Many younger, urban drivers
did not consider driving 40 mph to be more dangerous than driving 30 mph. But,
statistics showed that a pedestrian struck by a car at 30 mph had an 80 percent
greater chance of survival than a pedestrian struck at 40 mph.

The research also reported the younger drivers said that if they struck a
pedestrian, they would experience extreme guilt. The British DFT launched an
advertising campaign targeted at younger drivers using this behavior insight.

"As a result, DFT was able to decrease child deaths by 10 percent more than their
target, two full years earlier. ... By targeting the beliefs and motivations of
particular groups at risk for negative behavior, DFT focused on what worked,
rather than wasting energy and resources convincing the inconvincible," the white
paper said.

In the end, the trick is to find programs where applying behavior insights can
help the agency improve its process throughout the organization.

"There's a detailed scientific literature here that needs to be sort of translated
into policy program language, and then, deploying three or four insights, trying
some things and then constantly trying to establish which ones are being more
effective and which ones aren't," Kohli said. "Then, once you know the approaches
that are most effective, then you can scale them up and then really roll them out
across your program."